Three key factors can make or break acquisitions

Two auto industry examples illustrate how acquisitions succeed or fail. In the first, Daimler acquired Chrysler and smaller shares of Mitsubishi and Hyundai. In the second, 17-LB-542 Merger blog stock photoRenault bought a one-third stake in Nissan. Daimler was stronger than the companies it acquired and could never sync with them. The marriage foundered. Renault and Nissan were similar in size, the acquisition succeeded and Nissan's been revived under Renault's partial ownership.

Ability to mesh well with the acquired/acquiring company is but one factor to strongly consider before proceeding with an acquisition. The following is a short list of strategies to understand when acquiring or being acquired by another company.

  1. Synergy must result. If an acquisition doesn't make the two companies better together than either would be on its own, why move forward? The deal's equation must be not 1 + 1 = 2, but 1 + 1 = 3 or more.  Synergies may flow from the companies gaining greater revenues, realizing reduced costs or achieving enhanced sustainability together.
  2. Collaboration and shared objectives. The acquisition has a far better chance of succeeding if the two companies possess similar goals and can come together to collaborate harmoniously on key aspects of the businesses.
  3. Transition team essential. There must be a top-notch team in place to manage the transition from two separate companies to one entity pulling together.  It's a crucial stage in creating a good cultural fit. The best players must be calling the shots.

Figures show just 25 percent of mergers and acquisitions succeed. Follow the principles above, and yours may be among that fortunate percentage.

What do you feel are the most important keys to an acquisition?


Business necessity can be the mother of reinvention

16-LB-581 April2 blog photoThose who love video know Netflix and Blockbuster. Both became household names, Netflix via a mailed video platform, Blockbuster by opening countless video rental stores. Having reached success, Netflix reinvented itself with video streaming services. Blockbuster did not reinvent itself, and the days when its stores stood on every corner are but a memory.

The example points up an oft-experienced business reality.  After growing for years, a company goes into a growth stall. It could be from misreading technology or buying trends, a stagnation in core demand for products or myriad of other growth-stymying factors. Some argue a company facing this stage must reinvent itself or face extinction. If yours is a company needing reinvention, here’s how to do it successfully:

  1. Look beyond today’s success.  Some companies become convinced today’s robust revenues and profits will continue forever.  That can blind them to emerging market challenges on the horizon. Keep an eye out for changes that could derail your success, and ways to reinvent your company in response.
  2. Hone new capabilities.  Your company’s capabilities and expertise differentiate it from lesser competitors.  Sooner or later, these capabilities will likely become dated. Invest in training, research and development that enable your company to maximize business opportunities that lay ahead.
  3.  Strengthen your company with additional talent. Reinvention also calls for new team members who can bring fresh insights to corporate processes as well as today’s changing marketplace.

In business, change is the only constant. The difficult process of reinvention can be a critical strategy in ensuring your company changes with the times.

How are you reinventing your company?


How to ensure healthy business cash flow.

Ever notice how often flow of cash is likened to flow of water? People talk of funds drying up, money evaporating, flow of funds slowing to a trickle and costs siphoning off profits. There's good reason for this symbolism. Just as no life form can survive long without water, companies without cash flow are fated to premature demise. 16-LB-580 Cash Flow Blog photo

To ensure your company's cash flow stays healthy, routinely monitor current and project future cash flows. Understand where your company's cash level stands right now. Create a monthly cash flow forecast. Start with past records of revenues and expenses, as well as customer payment histories and business outflows.

Then factor in the current business and economic climate to arrive at your expected cash position six months or a year from now.  As you move forward, stay on course by comparing actual to forecasted flow.

Remember these additional considerations:

  1. Identify problems early.  Keep a watchful eye so issues don’t become crises. Advance awareness of looming cash flow woes may enable you to seek your bank's help to stave off problems. Have a backup plan prepared to address real emergencies.
  2. Adopt a business growth plan to guide growth. Cash outflows for expansion often occur long before inflows from expansion are realized. Business growth plans can help ensure growth remains sensible and cash flow healthy.
  3. Leverage tech tools. Cloud-based accounting systems are increasingly affordable and easily implemented, helping your company smooth out cash flow fluctuations.

Implementing these steps can ensure flow of cash stays strong and steady, helping your company in turn remain vibrant.

What steps enable your company to maintain healthy cash flow?


Leadership Principles That Work Best for Today's Workforce

Today's work world is different from that of yesteryear. It's more diverse, inclusive and fast-paced. With many Boomers toiling longer alongside growing ranks of Millennials, today’s workforce may be more multi-generational than ever before. These changes mean today's leaders must adhere to a different set of principles than those followed by past leaders. 16-LB-579 March Blog Stock Photo

Many believe the most important single principle is trust. Leaders who trust and in turn are trusted by those they lead tend to build effective workplaces characterized by innovation, cooperation and productivity. Consider these additional leadership principles.

  1. Sincere concern for employees. Myriad studies have proven leaders demonstrating a sincere interest in their employees' lives, both at and away from work, gain the greatest buy-in from employees. Sincere appreciation for workers breeds staff engagement; the opposite leads top employees to seek greener pastures.
  2. Accessibility and communication. Today's most effective leaders aren't sealed off from their staffs, they're out interacting with them, sharing information and seeking  input on matters of concern to all.  Fostering an open, two-way communication process is instrumental in building trust throughout an organization.
  3. Make good on promises. True of all of current working generations, but particularly Millennials, is the tendency to hold leaders accountable for fulfilling promises. Leaders who promise but fail to deliver may alienate the majority of staff.  One who consistently keeps promises large and small takes a major step toward creating an engaged and productive workforce.

There's no secret formula for effective leadership in today's work world. Follow the above principles, and it's a good bet you'll retain great workers and attract terrific new ones.

What leadership principles are most important to you?

 


Finding a Community Bank Right for Your Business

16-LB-578 Blog photoAs we’ve noted, not all banks – or businesses – are alike. Finding a bank with services well-tailored to your own distinct business opportunities and challenges is critical. Unfortunately, some companies spend about as much time selecting a bank as they might a low-end shredder. They’re sadder but wiser when their choice proves a poor match for their unique needs.

For many companies seeking personal service, quick response and lending flexibility, a community bank outperforms alternatives, from corporate banks to online lenders.

Ask your prospective bank these questions when determining which community bank is right for your company.  

  1. Extent of lending authority. Does the relationship banker have the flexibility to make substantial loans without a lot of red tape?  What’s the maximum amount the bank can extend to any single borrower? How quickly can the banker respond to a lending request?
  2. Boots on the ground. Does the banker you’re considering live in and know the business climate of your geographical area? Relationship bankers at many community banks possess keen insights into the local business community, and therefore may be more able to grasp a solid loan application’s merits.
  3. The personal touch. Will the relationship banker you choose take the time to know your needs personally, and be able to help your company surmount business obstacles uniquely its own? Also examine the bank’s turnover, as well as your banker’s longevity with the bank and his or her experience. Is there a good probability that he/she will continue serving your company as it grows?

Finding the right community bank takes effort. But that extra legwork may mean a big leg up for your company. What banking qualities do you consider crucial?

 


What to Know When Checking Your Credit Score

The winter months are prime for checking credit scores. Many also apply for credit during this time. Here’s what you should know when checking your score. 16-LB-577 Credit Score blog photo

  1. A credit score differs from a credit report. The credit report is an organized list of your credit activity. The credit score is a result of calculations that use your credit report to determine a value which suggests how likely you are to pay off your loans in the future. The Consumer Financial Protection Bureau currently recommends annualcreditreport.com for obtaining a free copy of your credit report once a year.  You can purchase your credit score from annualcreditreport.com after you view the free credit report. You can also purchase it directly from the credit bureaus or http://www.myfico.com/ .
  2. Key categories impact scores. Your credit score is calculated from five core categories, which are history of paying on time, amounts owed at present, length of your credit history, types of credit and new credit searches. The most widely used credit scoring model is the FICO Score (Fair Issac Corporation). Scores range from 350 to 850, with 650 deemed a “fair” score, while 750 or greater is “excellent”.
  3. Low credit scores can really cost you. There’s a compelling reason for striving for a high credit score. Without one, you’ll likely pay more for everything from credit card balances to mortgages. It could cost you thousands over a lifetime.
  4. Your credit score as well as your credit report can detect fraud. If you become an identity theft victim, it could unexpectedly lower your score.

It’s a good practice to check your credit score regularly.  Do you have any questions about credit scores?


What Will Be 2017’s Top Commercial Lending Trends?

The year ahead is shaping up as an exciting one for business. Rising employment, a more robust economy, and the prospects of deregulation and increased infrastructure spending have many eagerly anticipating economic growth. These developments and others cannot help but alter the commercial lending landscape for 2017.  16-LB-576 2017 trends blog photo

Whether it’s competitive forces, technology or legislation, there’s no telling just what trends will most impact commercial loans over the next 12 months. But many observers are betting on these developments proving particularly pivotal for loan seekers.

  1. Greater efficiencies through technology. The rise of online lending isn’t the only tech story impacting commercial loans. In 2017, technological advancements in loan initiation, risk assessment and management will be integrated, resulting in more streamlined application and approvals for business customers. Ability to pull data from formerly disparate banking systems should help enhance banks’ global risk assessment on commercial loans.
  2. Deregulation may spur greater lending. The new president has made no secret of his desire for deregulation. Greater regulation tends to inhibit lending, so deregulation – particularly rollback of Dodd-Frank provisions -- may result in increased commercial loan activity ahead. Reduction in regulatory costs could particularly benefit community banks – and their customers.
  3. Rising interest rates. All signs herald a rising interest-rate environment, which can have an array of effects on commercial lending. Higher interest rates often mean a more robust economy, which tends to benefit the real estate market. But it could also make borrowers and banks more risk averse.

Many surprises likely await us in 2017. That’s all the more reason to stay in close touch with your commercial banker in the months ahead.

What commercial loan trends do you foresee for 2017?


What Does It Take To Exceed Customers’ Expectations?

16-LB-575 customer expectations Blog photoAfter a family vacation at an upscale hotel, a guest contacted the staff to say his young son had left his stuffed giraffe behind and was distraught.  The toy was returned with a book of photos showing the animal enjoying himself during his “extended stay.”

The example shows the power of exceeding customer expectations. This practice makes customers feel highly valued, and leads them to tell others about their experience. The company wins a customer for life, and gains valuable word-of-mouth advertising.

Follow these best practices when striving to exceed customers’ expectations:

  1. Research customers' expectations. You can't exceed expectations if you don't know precisely what they are. Conduct surveys of customers asking their top priorities. Provide incentives to encourage as many to complete and return the survey as possible. Ask customers if their expectations are being met, and if not what you can do to change their thinking.
  2. Emphasize quality foremost. When customers no longer patronize a company, it’s most often because they felt disrespected. Take the time required to willingly resolve any issue fully.  Customers will remember the value your company places on their business and be loyal to you.
  3. Make a connection. Among the expectations customers have of companies is that they're dealing with fellow human beings who respect their needs, and are trustworthy, empathetic and friendly. Often, these feelings are not conveyed by companies. Those that do make such a connection exceed customer expectations.

When you exceed customer expectations, you'll recruit a delegation of “brand ambassadors” eagerly committed to telling others how great you are.  How great is that?

Do you have an example of your company creatively exceeding customer expectations?


Essential Strategies Protecting Your Company from Financial Fraud

Unfortunately, financial fraud aimed at companies is a growing crime.  The Association of Financial Professionals found fraud against businesses rose sharply in 2015, with fraud as a percentage of revenues climbing from 1.32 to 1.47 percent year over year. Often perpetrated by smart, tech-wise criminals, fraud costs companies plenty. The Association of Certified Fraud Examiners’ recent Global Fraud Study revealed typical businesses lose a median of five percent of revenues to fraud yearly. 16-LB-574 Fraud Prevention photo

When it comes to preventing fraud against your company, a good offense is often the best defense.  Try these strategies to prevent fraud from occurring.

  1. Educate your employees. You and your staff should be the ultimate defenders against fraudsters. Your employees should be trained about the risks of financial fraud from outside and within the company, how to identify red flags fraud is happening, safe practices to follow and how to report financial fraud.
  1. Make fighting fraud a daily practice. Review your accounts daily, questioning any suspicious items. Ensure network access for payments is limited to company-owned laptops or personal computers. Routinely review privacy practices, deleting client information that's sensitive or no longer needed. Keep desk drawers and cabinets containing sensitive data locked.
  1. Work closely with your bank. Finally, view your bank as a key partner in protecting your company against unauthorized financial activities. Your bank likely has programs to safeguard your company against financial fraud, so talk to your bank about how you can join forces to thwart attacks.

Financial fraud targeting companies is a serious matter. But remaining vigilant can help prevent your company from being victimized.

What steps is your company implementing to vanquish financial fraudsters?


Banks Differ Widely, and That Impacts Customer Trust.

If you’ve seen the news lately, you know that Wells Fargo bank employees set up 2 million phony accounts in the names of customers without their knowledge. 13-WD-067 LeadNurturing PHOTO The result: The bank’s once sterling reputation was severely tarnished, and its customers lost – perhaps forever - the comforting sense that the bank would act in their best interests. 

The Wells Fargo imbroglio has adversely affected the public’s view of banking in general.  But remember, great differences exist between banks like Wells Fargo and community banks like Leaders Bank. As a community banking institution, Leaders Bank prides itself on implementing and maintaining extensive and effective controls designed to prevent the opening of fraudulent accounts. Leaders Bank’s entire corporate culture is built around putting the needs of its customers first.

Here are several important qualities differentiating Leaders Bank from others:

 1.      Wells Fargo and other large banks used incentive programs to spur employees to sign up customers for new accounts and services. As you know, Wells Fargo has now dropped that program. But community banks like Leaders Bank have never used such programs. 

2.      Like most other community banks, Leaders Bank leverages its smaller size for customers’ benefit.  It’s not just that Leaders Bank employees know their customers by name. The bank’s small size also allows it to maintain effective internal controls designed to prevent fake account abuses. These controls are both documented and retained on file.

3.      In addition to the controls listed above, Leaders Bank has policies and procedures in place to ensure new account activity is reviewed independently of the new account area.  These practices provide an additional layer of review to prevent fraudulent account creation.

When you examine differences between banks, you’ll recognize the greatest difference offered by Leaders Bank. It puts customers first.

Do you have any questions about how community banks are different?